As a credit union, you know that auto loan volume can be a
bit like a rollercoaster with plenty of ups and downs. Right now, according to
Experian, auto loans are on an upswing at $371 billion, which is a 64% increase
since 2009. Hand-in-hand with this increase is a boost in subprime auto loans
which have a more sizable growth of 93% since 2009. Subprime loans now account
for 20% to 30% of all auto loans since 2000.
The good news is that auto loan volume is up – which is always welcome news. Unfortunately, there’s a flipside to these figures, delinquencies. Naturally, when auto loan volume rises, so do delinquencies. According to Standard & Poor’s, over 3% of loans are at least 60 days in arrears. That’s a 1% increase from 2011. While credit unions may not play a large part in the subprime financing, there are still many good opportunities in near or non-prime loans.
This leaves credit unions with a challenge – how do you manage this auto loan volume increase, especially non- and subprime loans, without increasing your loan risk or collections efforts? A GPS-based device from Spireon called LoanPlus CMS holds the answer.
The good news is that auto loan volume is up – which is always welcome news. Unfortunately, there’s a flipside to these figures, delinquencies. Naturally, when auto loan volume rises, so do delinquencies. According to Standard & Poor’s, over 3% of loans are at least 60 days in arrears. That’s a 1% increase from 2011. While credit unions may not play a large part in the subprime financing, there are still many good opportunities in near or non-prime loans.
This leaves credit unions with a challenge – how do you manage this auto loan volume increase, especially non- and subprime loans, without increasing your loan risk or collections efforts? A GPS-based device from Spireon called LoanPlus CMS holds the answer.
How it Works
With LoanPlus CMS, your credit union will be able to have a small electronic device called a Remote Collateral Management Unit installed on each vehicle. To recover a vehicle, the system not only lets a credit union locate a vehicle but an additional option allows you to remotely disable the vehicle as well. However, LoanPlus CMS is not just a repossession tool, it allows credit unions to help more members. By providing more loans in this area, credit unions can truly help members with damaged credit histories to restore their credit rating and securing better interest rates in the future.How it Helps
- Improve Payment Behavior and Decrease Delinquencies – A good strong closing and the installation of the GPS unit will provide members an extra incentive to make their payments on a timely basis. If that’s not enough, the credit union can have a reminder buzzer sound every time the car is started and the payment is past due. And, yes, with the GPS units you can also easily locate a vehicle if it comes to repossession. This is a great advantage for the credit union but it also provides tools and incentives for the member to improve their payment behavior and credit rating.
- Attract and Retain More Members – We know you have members that have been with your credit union for years because when they needed an auto loan, your credit union was the only place that would help. LoanPlus CMS is a great platform to build on that history. Maybe it allows you to buy a little deeper and serve more new or existing members. Maybe it’s a key component of a “First Time Car Buyer Program” for members with little or no credit history. Or maybe it allows you to finance a few more loans from your local dealers and expand your relationships there.
- Significant Member Savings – Credit unions are more likely to offer rates far better than other providers, saving thousands on interest and avoiding other costly fees associated with subprime lenders. Plus, if the vehicle is stolen, the credit union will be able to work with the police to locate and recover it.
- Maximize Your Resources – You can integrate LoanPlus CMS with your current portfolio management system and use its customizable reporting to improve efficiencies and productivity.
Positive Results
The National Alliance of Buy Here, Pay Here Dealers (NABD) conducted
a survey of collateral management system (CMS) users in 2011 and found that collection
departments saved $300 to $750 per repossession when using a CMS. Dealers who
used a CMS were also able to reduce delinquency rates by 10%. Using a CMS also
prompted borrowers to interact more often with the lender with inbound calls
growing from 400-500 per day to 500-700 per day. The CMS users also revealed
that having the ability to change their borrower’s behavior was the greatest
benefit of using the product.
To learn more or sign up for a free webinar click here, call 800.262.6285 or email info@cusolutionsgroup.com.
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